Australia’s largest brick manufacturer has become the latest casualty in the nation’s construction industry crisis, with the company forced to close down a major plant in the country’s west.
Concrete block and brick producer Brickworks revealed on Thursday its Western Australian subsidiary Austral has been running at a loss in recent years off the back of a reduction in building activity.
As a result, the company has made the “difficult decision” to shut down its last manufacturing centre in the state, located in Cardup about 46km southeast of Perth.
“After careful deliberation, we have decided to mothball our Cardup factory to focus on the sale of excess stock,” a statement released by the company read.
“To reflect the scaled back operations in WA we have made the difficult decision to make some roles redundant.
“Unfortunately, this step is considered necessary at this time to assist in stemming the sustained losses being experienced in this market.”
The company’s loss in revenue comes amid a “slowdown” in building activity and loss of key customer accounts, which follows its attempts to increase profit margins.
“We offer our heartfelt thanks and appreciation to all staff involved, acknowledging a number of impacted employees have been with our business (for) many years,” the statement concluded.
The plant has fallen victim to closures in the past, shutting its doors twice in 2012 and 2019 before major plans were made in 2020 to rejuvenate the site.
Now, with manufacturing ceased, the site will shift focus to selling off its excess stock.
Industry at risk
Brickworks’ Cardup closure comes as insolvencies in the construction sector continue to rise and are alarmingly yet to reach pre-pandemic levels.
The latest industry data from CreditorWatch’s Business Risk Index report named construction as the second-highest industry to be at risk of businesses going under, with 0.7 per cent of businesses going into insolvency.
CreditorWatch chief economist Anneke Thompson analysed the data, noting if it wasn’t for the pandemic, more insolvencies within the industry would have occurred sooner rather than later.
“The very low levels of insolvencies in the construction sector during the Covid-19 lockdowns suggest that a number of businesses remained in business that otherwise would not have,” she said.
“The huge amount of government stimulus showered upon the wider economy, and in particular the construction sector, allowed many businesses that were not viable to stagger through.
“These businesses were nicknamed ‘zombie businesses’ during COVID-19, and much higher supply costs, interest rates, labour costs and reducing demand and government incentives are now exposing these companies.”
Closure follows mass building company casualties
Ms Thompson’s comments follow the collapse of some of the most renowned names in the country’s building sector, including Australia’s 13th largest home builder Porter Davis and Lloyd group, which went bust within 24 hours of each other last month.
These builders join 1236 companies in the construction industry which went into liquidation, receivership or administration before March 1 in the 2022-23 financial year, according to Australian Securities and Investments Commission (ASIC) data.
Alarmingly, this figure is predicted to rise, and compares to a total of 1284 building companies which closed their doors during the 2021-22 financial year, economy site Macrobusiness reports.
Mahercorp, the parent company of Eight Homes and Urbanedge Homes, is the latest builder to voluntarily call in administrators, however, its CEO insisted the company hasn’t collapsed.
“I want to emphasise that Mahercorp has not collapsed and is not in liquidation,” Steve Maher said in the statement.
“My intention is to work with the administrator on a plan that I hope allows us to restructure the business, creating a more sustainable footing and to complete your home.”
Prior to Porter Davis and Lloyd group going bust, a number of other construction companies packed up the tools in March.
This included Queensland-based business National Construction Management Pty Ltd and NSW firm Allworks Building Pty Ltd.
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Ajit Constructions was also ordered into liquidation that month by the Supreme Court of NSW following an application by one of its trade creditors Boral Resources NSW.
Meanwhile, a number of big-name groups including Probuild, Home Innovation Builders, Privium, Condev Construction and Pivotal Homes became insolvent in the past year.
All collapses have put a number of jobs at risk while leaving families in limbo as they desperately scramble to find another builder to finish their forever home.
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